AdvEn: two secured creditors' appeal struck for want of permission

On September 29, in AdvEn Inc (Re), 2026 ABCA 310, Justice Jane Fagnan of the Court of Appeal of Alberta granted AdvEn's application to strike the notice of appeal that Secure Property Development & Investment PLC and 2815793 Alberta Ltd. ("281") had filed against Justice Dunlop's August 19 order. That order authorized AdvEn Inc. and AdvEn Industries Inc. to borrow up to US$650,000 from 2841034 Alberta Ltd. ("284") and ranked its charge, with an administration charge and a D&O charge, ahead of all other security. The reasons conclude: "Permission to appeal is required. The application for an extension of time is denied. Even if an extension were to be granted, the application for permission to appeal would be denied. The application to strike is granted," per the Reasons for Decision, 2026 ABCA 310, Sept. 29, 2026, paras. 1, 3, 53. The competing applications, heard on September 23, were set out here on September 24.

At the August 19 hearing, as the reasons record it, the two appellants had supported moving the companies toward a restructuring. Their concern was that the proposed interim financing would prime their asserted priority. During oral argument they removed their requirement that the sale process be revised, and they did not object to the size of the charges; their submissions "focused on whether 281 or 284 should be interim lender based on the competing proposed financing terms." 284 was incorporated 14 days before the hearing by two former directors of 281, and is the lender the order approved, per the Reasons for Decision, 2026 ABCA 310, Sept. 29, 2026, paras. 7–12, 30 and the Order (SISP & Stay Extension), Aug. 19, 2026, p. 1.

Rights that existed before the order

The appellants said they needed no permission. Under s. 193(a) of the Bankruptcy and Insolvency Act, as the court put it, "no permission is required if the point at issue involves future rights," and under s. 193(c) none is required "if the property involved in the appeal exceeds $10,000 in value," per the Reasons for Decision, Sept. 29, 2026, paras. 15, 17, 22.

Future rights, Justice Fagnan wrote, citing four decisions of the Court of Appeal for Ontario, "are not procedural rights or commercial advantages that may accrue from the order challenged on appeal, they are future legal rights; they do not include presently existing rights that may be exercised in the future." The appellants' rights fell outside the category: "A right to enforce on security is a present right even though it may have to be enforced in the future due to an insolvency. Whatever may be the appellants' rights as secured creditors, those crystallized prior to the order. The order did not finally fix the priority of any secured claimant's security, as suggested by the appellants," per the Reasons for Decision, Sept. 29, 2026, para. 18.

Manitok Energy Inc (Re), 2022 ABCA 260, on which the appellants relied, "concerned entitlement to post-sale proceeds in an insolvency proceeding that had already concluded"; that the court in PricewaterhouseCoopers Inc v 1905393 Alberta Ltd, 2019 ABCA 433, had not addressed permission under ss. 193(a) and (c) "is not significant in the context of this application," per the Reasons for Decision, Sept. 29, 2026, para. 19. The complaints about the refused adjournment did not relate to a present right either. As for the sale process, "any objections to the SISP itself were withdrawn during the oral hearing," so an appeal on that ground would need permission in any event under Rule 14.5(1)(d) of the Alberta Rules of Court, per the Reasons for Decision, Sept. 29, 2026, paras. 20–21.

A loss no one had measured

The court took the test under s. 193(c) from the Ontario decision in Bending Lake, 2016 ONCA 225: the subsection does not apply to orders that "are procedural in nature, do not bring into play the value of the debtor's property, or do not result in a loss." The grounds about service, notice and the adjournment were procedural. So were the rest, on the court's own decisions in Mantle Materials Group, Ltd v Travelers Capital Corp, 2023 ABCA 339, and Athabasca Workforce Solutions Inc v Greenfire Oil & Gas Ltd, 2021 ABCA 66: "Orders approving sales processes, interim financing and super-priority charges under the BIA have been found to be procedural in nature." The court added: "Given the appellant's agreement to the restructuring and the SISP, the Charges were inevitable. Without granting priority to the Charges, the necessary professionals would not undertake the required work," per the Reasons for Decision, Sept. 29, 2026, paras. 23–25.

On loss, the question was "whether the order caused the appellants an actual, proven loss exceeding that amount." Bald assertions or allegations "are not enough," and neither is "mere speculation of a risk of loss," per the Reasons for Decision, Sept. 29, 2026, para. 29. As in Bending Lake, the court said, the appellants had not objected at the hearing to the restructuring or the sale process, "notwithstanding they risked a shortfall on the sale," nor to the quantum of the charges. Before the Court of Appeal they argued that AdvEn's indebtedness, the information on realizable value and their positions as secured creditors gave a clear evidentiary basis for a loss of over $10,000, per the Reasons for Decision, Sept. 29, 2026, paras. 30–31.

The court found no such basis. "AdvEn's business is pre-revenue. The valuation in the Proposal Trustee's First Report was based on AdvEn's book value. There has been no assessment on a deficiency and it is not possible to do such an assessment at this point as the SISP has not run its course," Justice Fagnan wrote. "There is no way to know what its assets may be worth at the end of the sale process," per the Reasons for Decision, Sept. 29, 2026, para. 32.

Nor, on the reasons' account, was there evidence of what the appellants were owed. The proposal trustee had not assessed the validity of their security and "indicated it does not have clarity on amounts advanced by 281." 281 had filed no evidence of indebtedness, and the appellants had filed no responding evidence below on the validity of their security, the amounts owed to them, "or why the restructuring process and the associated required charges would cause loss to their security," per the Reasons for Decision, Sept. 29, 2026, para. 33. The trustee's initial security review, the reasons note, indicated "a complex scenario wherein 281, SPDI and Excelsior are each secured in first position on different assets in different companies." Excelsior Management Limited, also a registered secured creditor, is not an appellant, per the Reasons for Decision, Sept. 29, 2026, paras. 1, 4, 34.

The sale process "is interlocutory; it makes no determination of economic interests," the court said, and the order "did not crystallize a loss or realisable value. Nor did it determine the entitlement of any party with an economic interest in AdvEn to the sale proceeds." "I conclude that the order relates to procedural matters, does not bring into play the value of the debtor's property and does not result in a loss," Justice Fagnan wrote, per the Reasons for Decision, Sept. 29, 2026, paras. 36–38.

No more time, and no permission

Permission being required, the appellants needed more time to seek it. Rule 31(1) of the Bankruptcy and Insolvency General Rules permits an appeal "within such further time as a judge of the court of appeal stipulates." Of the five factors the court listed, citing its 2018 decision in 2003945 Alberta Ltd v 1951584 Ontario Inc, it found the second, a reasonable explanation for the delay, missing: "There is no reasonable explanation for the failure to file an application for permission to appeal in a timely manner. The appellants should have understood from the case law that it was likely permission would be required," per the Reasons for Decision, Sept. 29, 2026, paras. 39–42.